Renting helps to keep things flexible, says factory owner
“You’ve got to adapt pretty quickly to wherever the demand is, otherwise you’re not going to survive,”
Flexibility is important for Pat Larsen, a light-fitting manufacturer from the west of Johannesburg. A large part of his income derives from helping clients convert from old lighting technology to the latest, and in an industry so subject to trends, fashions and technological development you have to remain light on your feet.
“You’ve got to adapt pretty quickly to wherever the demand is, otherwise you’re not going to survive,” says Pat.
It is therefore not surprising that when he had to move his fledgling Lighting Logistics from his garage where he started up nine years ago, he chose to rent business premises rather than buy. “This business is pretty volatile – sometimes you have a good month, sometimes bad when the rand goes for a ball of chalk (for example). I just didn’t want to be bonded.”
The rather unusual growth path of Lighting Logistics reflects his ability to adapt to changes. After cutting his teeth as the director in a large lighting company, Pat stepped out to gain control over his own life, and he started Lighting Logistics mainly as a maintenance and conversion contractor – helping complexes maintain and upgrade their lighting systems to the latest technology.
He sourced most of his stock from large lighting importers, and is still today involved in quite a bit of wholesaling to contractors who work on high-end developments. The stock for industrial lighting, however, is mostly locally made, but here Pat found the suppliers quite unreliable, to such an extent that he ventured into producing light fittings himself. “A huge part of my business is good service and good quality, and my business was in fact suffering because of delays with orders placed at local manufacturers, ” he says.
Again, Pat followed an approach of travelling light, starting off with manual equipment before moving on to automated machinery, all paid for in cash. He sees debt, especially on the scale that would be required to buy his own premises, as a major shackle that would impede his flexibility.
As he moved out of his garage, he found a workshop at the Business Partners Tower Hive in Industria, Johannesburg, and has been renting there ever since.
He deliberately chose the area as it was close to several other large lighting players, and therefore on the route of all the suppliers to the industry. It did not matter that his first orders for stock and material were tiny – the suppliers would simply chuck them in the trucks with the consignments for the large companies, and deliver quickly and reliably.
So far, he has had to move only once as he expanded his business, and is now renting about 250 square meters two units at the Hive.
Pat is fortunate that his landlord, Business Partners, is not the type that makes a business owner wish for their own premises. His lease is renewed annually, with a market-related escalation that has always been reasonable. “I feel that we’ve actually got value for money,” says Pat.
Another major factor in the question of renting versus buying – the costs of moving – also helps to convince Pat that Lighting Logistics is better off renting. The whole operation consisting of three large machines for cutting and shaping the products, several smaller ones and seven workers is light enough to move without prohibitive costs.
Pat says he still has some space to expand in the workshop, but remains flexible also about his need and will to do so. One of the reasons why he started his own business rather than working as a cog in someone else’s machine, was that he loved being involved in all aspects of the business – the workshop floor, the marketing, right down to handling Lighting Logistics’ SABS accreditation himself. “I’m a hands-on businessman. I get stuck in and I enjoy the physical side of things,” he says.
Further growth, he realises, will require him to start appointing “control staff”, a step that he has so far managed to avoid by keeping things tight and light enough to control himself.
At the age of 61, Pat’s thoughts frequently explore his options for retirement, but it does not include building a nest egg in the ownership of a business premises. If anything, his retirement mitigates against him burdening his business with property finance at this stage, he says.
Ideally, he would like his son, presently a professional hunter, to take over the business one day, but as always his plans remain flexible.
For a list of Business Partners Limited owned and managed properties for rent, visit www.businessmechanics.co.za